Shrimp Farming Stuck in a Vicious Cycle at the Low End, Industry Nears a Turning Point and Seeks a Breakthrough

With the outbreak of EMS, an unusual supply shortage during the Asian farming season, the prolonged euro crisis, a weak yen and the US countervailing duty investigation have all had a negative impact on its international trade. Turning to the domestic market, domestic shrimp were affected by EMS disease, and combined with natural disasters such as "Utor" and "Fitow", supply was low and prices high. Driven by domestic consumer demand, Chinese shrimp bosses flocked into the Vietnamese market to snap up Vietnamese shrimp. Shrimp farming went bust, shrimp prices wobbled, and the shrimp industry panicked.

I. The vicious cycle of low-end farming in the shrimp industry

China's shrimp farming industry has a history of more than thirty years and has weathered many storms, but it has always been caught in a recurring cycle at the very bottom of the farming segment. History repeats itself, and the shrimp industry rises and falls; summing up the reasons, they are none other than the following:

Farming ----- No know-how in seedling breeding, no solution for disease

In recent years, the shrimp farming industry has faced difficulties; the blind expansion of farming scale has led to a decline in shrimp quality, an increase in pests and diseases, and a year-on-year drop in shrimp survival rates. Introducing broodstock from abroad has not succeeded, and domestically no high-quality seedlings can be bred; the backwardness of the seedling breeding sector is currently the most difficult cause. China's shrimp farming environment is poor and shrimp pond density is high; when faced with the spread of pests and diseases there is no way to control it, and the only outcome is to wait for reduced output and reduced income.

Marketing ----- Weak brands, chaotic market

Judging from the category structure of the aquatic industry, the shrimp category, especially penaeid shrimp, is the real protagonist of global aquatic trade; judging from consumption habits and the consumer base, the shrimp category, because of its low consumption threshold, high consumption frequency and broad consumer base, fully has the foundation to become a king category; judging from the changing trends in residents' dietary habits, China's per capita consumption of the shrimp category is still very low, but in recent years it has grown rapidly and in the future will be a market worth hundreds of billions, yet a very obvious problem has emerged: why, in such a huge market with such a good consumer base, has the shrimp category, especially penaeid shrimp, never produced a truly brand-managed enterprise? And the shrimp on the market are mainly distinguished by variety. This has led in recent years to an increasingly serious practice of glazing shrimp with ice in the penaeid shrimp market, and the industry lacks unified standards. Shrimp enterprises fight each other over price, and whether prices rise or fall still depends on the weather.

Root cause --- A vicious cycle at the low end of the industry

Looking across the development course of penaeid shrimp, storms recur, yet the people sitting aboard the shrimp industry ship rarely think about why this happens. Why can't technology achieve a breakthrough? Why does farming develop in a disorderly way? Looking back, the penaeid shrimp industry has always been in the start-up and growth stages of the industry life cycle. When a new technology or new variety appears, the shrimp industry grows rapidly and farming volume increases greatly, after which disorderly development damages the farming industry and the industry enters a downturn. At this point, deep processing and industrial chain expansion may be interrupted, farming mindsets cannot be adjusted, farming technology cannot achieve breakthroughs, policies and plans cannot be implemented, and sales terminals cannot be controlled, leaving the industry forever stuck in a vicious cycle at the low end.

II. The industry nears a turning point and breaks out of the vicious cycle

2013 is destined to be a turning-point year for the industry. The sea cucumber industry was the first to reach a turning point, the abalone industry followed closely behind, and the penaeid shrimp industry, with price but no volume, is also approaching an industry turning point. Backward seedling breeding technology, a lack of deep processing, rising farming costs, disorderly farming scale and chaotic sales terminals have pushed China's shrimp industry to the forefront of change. Facing growing domestic market demand and soaring global shrimp prices, China's penaeid shrimp industry must make changes in seedling breeding, farming, processing, products, brand promotion and many other aspects, break out of the vicious cycle, and build a full industrial chain.

Plan farming scale, improve farming technology

At present, penaeid shrimp face the awkward situation of having no goods to supply, low volume and high prices, and seedlings having lost their say. Through independent seedling breeding, expand seedling coverage and meet the most basic farming needs. Farming scale must be led by the government and associations to achieve cluster-style development in farming. From the bargaining over broodstock shrimp, one can see the power of "clustering"; traditional scattered farming cannot form a scale effect. Improve farming technology, from seedling selection to feed, change the farming environment, farm premium products, and breed good shrimp.

Transform toward deep processing and achieve product diversification

China's enormous consumer market has long kept penaeid shrimp sales in the circulation segment as live-product sales, with a short processing chain and simple, rough processing methods. Developing deep processing in the industry is an important step for the penaeid shrimp industry to move from the farming segment toward the sales segment. Deep processing brings diversified product forms and higher industrial added value.

Brand-driven, terminal control

From the successful brand marketing of sea cucumber, abalone and hairy crab, we can witness the power of brands, and the development of the shrimp industry needs to shift from output-driven to brand-driven. At the same time, brand-based operation helps regulate the current situation in the market of serious ice-glazing of penaeid shrimp and the lack of industry standardization. Brand-based operation is even more conducive to refining channels, avoiding blind channel competition and promoting the healthy development of the industry.

Healthy farming, leisure farming

In the national "Twelfth Five-Year Plan", the idea of building marine ranches and promoting the development of marine tourism was put forward. The penaeid shrimp industry can also advocate healthy farming models, achieve coordinated development of resources and the environment, promote limited water exchange systems and biosecurity concepts, and embody an environmentally friendly philosophy. At the same time, integrate leisure into farming areas, shrimp fishing, shrimp-tasting banquets and so on to raise the profile of penaeid shrimp, increase attention, and build a full industrial chain.

The penaeid shrimp industry is approaching a turning point, and the penaeid shrimp market will remain at a high level for the next three years. Although in response to the current situation the shrimp industry is making adjustments, from the earliest statement on reducing the amount of ice glazing to Guolian Aquatic's court victory and then to the bargaining over broodstock shrimp in Zhanjiang, calls within the industry for transformation are growing louder. The domestic penaeid shrimp industry still faces a reshuffle across the whole industry, and shrimp enterprises urgently need to see the future situation clearly and seek new breakthroughs in industrial transformation.